Is AMAZON STOCK a BUY? Jeff Bezos Trillionaire?
Jeff Bezos becoming the first trillionaire in 2026 is trending on Twitter. For this to happen, Amazon stock price $AMZN will need to be at least $17000. Can this happen? Amazon is the third largest company in America after Apple and Microsoft. The company has been profiting from this lockdown as more people are forced to shop online. The stock price even reached all time high recently. Jeff Bezos currently owns 11% of Amazon and is the world's richest man with a net worth of $144 billion. Only 92% of his net worth is in Amazon, the rest is in Blue Origin, the Washington Post and other assets. For this analysis, we will assume that all his other assets will grow as fast as Amazon and that he owns 12% of it. Amazon has 3 business segments: Amazon North America, Amazon International and Amazon Web Services (AWS). 87% of the revenues come from their retail business, which unfortunately has very low margins. The operating margin of Amazon is about 5%, which is about the same as Walmart. In the retailing business, it is hard to go higher. With this lockdown, the sales of Amazon has been growing but the net income is not since they are employing more people and their expenses are increasing. The streaming services on Amazon Prime are most probably burning cash just like Disney+ $DIS and Netflix $NFLX . Most of the profits of Amazon comes from AWS. Cloud computing is what really is boosting the business of Amazon today. AWS has been growing by more than 40% per year on average over the past 5 years. Is Amazon a Buy? Amazon is priced for perfection with a current PE ratio of 114. For Jeff Bezos to be a trillionaire in 2026 and if Amazon keeps the same PE ratio, Amazon will need to have at least $80 billion in net income in 2026 with a market cap of $9 trillion. That's a 44% annual growth. It is possible but unlikely as when a company becomes bigger, the growth slows down and this is something we can already see happening to Amazon. Even if Amazon can have $80 billion in net income in 2026, it is very unlikely that it will still have such a high PE ratio. The problem is not with the business, the business will still grow, the problem is with the stock. In 2000, Microsoft was priced for perfection and had crazy valuations, then the stock crashed and it took 16 years to recover. The same thing may happen to Amazon. Any bad news could affect the stock price such as antitrust probes. Maybe Amazon will reach $17 000 in 2026 and Jeff Bezos will be a trillionaire but I see the probability of that happening to be quite low. There are other companies out there with lower risk but the possibility of the same reward. Watch the full video on YouTube and Subscribe: https://www.youtube.com/watch?v=wWCxVDOBV_U&list=UUPO3uUyoXSaFWG-Ldq1mqEQ Is Amazon causing a bubble in the NASDAQ? Read the full analysis on my research partnership: https://ishfaaqpeerally.teachable.com/courses/662813/lectures/16808822 Join my private investing group on Facebook for more: https://www.facebook.com/groups/IshfaaqInvesting/